Finance minister Grant Robertson has released the 2023 budget for NZ. Coming out in a time following cyclone damage, high interests’ rates and high costs of living the goal has been to help those in need, offer some cost-of-living relief and not spend too much in the process. Let’s look at how spending has been allocated.
Key Areas of Expenditure
Childcare
The government has introduced an extension to the 20 hour a week childhood education subsidy to children who 2 to 5 years old. This will provide a huge support to those with younger children as it makes the cost of childcare more affordable, and some may even use this opportunity to work part time. This will provide some relief for young families. This will cost the government $1.2 billion in the coming four years.
Public transport
Public transport will now be free for children under 12 years. This will once again be555nefit young families who may be able to save $20 - $30 a week on sending children to school, providing some cost-of-living relief. Public transport will also be half price for those between 12 and 24. This will benefit high schoolers and therefore families, uni students as well as young adults in the workplace. These are often the groups most affected by high costs of living and so this will equate to a real saving for them as well as further incentivise public transport as opposed to private forms of transportation.
Prescription Costs
Prescriptions will now be free as the government has decided to remove the $5 cost. This will make prescriptions and medications more accessible for all as the previous $5 payment may have presented as a barrier for some. This initiative will cost the government around 700 million in the coming four years.
Science and Gaming
$400 million is being spent on R&D and a “science city” project which proposes to combine science institutions to focus on health and wellbeing, oceans and climate, and biotech and energy. Along with this, the government have declared a 20% rebate on game development and allocated 4160 million toward this sector in order to compete with the conditions offered in Australia and retain what is one of NZ’s fastest growing sectors.
Infrastructure
Roading, rail, telecommunications, and electricity infrastructure such as those damaged by the severe weather events will be provided with $1 billion toward repairs and future proofing. This expenditure is in addition to the government’s $71 billion infrastructure investment over the next five years.
A New Tax Hike?
Despite the government declaring there will be no major taxes, following Parkers “High Wealth Individuals” report, a new trustee tax rate has been introduced. This will not affect many and only 5% of trustees will be affected. The top trustee tax rate has now been aligned with the highest income tax rate of 39% in the name of fairness and to address the rise in people using trusts to avoid tax.
Other areas of expenditure are climate change, healthcare as well as additional funding to the various ministries such as IRD, customs and foreign affairs and trade.
These are the key points from the 2023 budget. It has been named the “no frills” budget where spending has been kept to a minimum as high inflation and cost of living continues to plague the country. There are a few winners such as young families, young public transport users and those in science and gaming industries but overall, there is very little offered to the vast majority as the goal remains to minimise spending as the government remains in a budget deficit.
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